Lula Raises the Stakes

The bearded political leader they call Lula is the new phenomenon of globalization, a man with audacious ambitions to alter the balance of power among nations. Luiz Inácio Lula da Silva, the new left-wing president of Brazil, envisions a united South America that gains economic strength by drawing closer together in trade and bargaining collectively, much as the European Union does. He wants to create a global coalition speaking for the not-rich countries--reminiscent of the "nonaligned nations" that decades ago tried to stand between the cold war's two superpowers. And he wants to push the IMF, the World Bank and the United Nations to become more democratic.

Lula may well fail. Nevertheless, his aggressive diplomacy looks like the most promising initiative to reform globalization in many decades. One sure indication that Lula must be taken seriously is that the US government has mounted its own nasty, hardball diplomacy to isolate him from potential allies and crumple his ideas before they can gain momentum. The United States versus Brazil is a most uneven contest, and the smart money will not be betting on Lula. But he does not stand alone in the world, and may speak more authentically to this new historical moment than Washington does.

Toward that end, Lula became an energetic world traveler during his first ten months in office. He has persuaded South Africa and India to join Brazil in a new triangular dialogue that will focus on technological alliances and social issues like world hunger, and also serve as a unifying opposition voice inside the World Trade Organization. Indian Finance Minister Yashwant Sinha defined the purpose as promoting the economic and social interests of the Southern Hemisphere. "We have thought enough about South-South cooperation," he said, "and we have reached this stage now where we want to give it a concrete shape." Lula is courting China to become the next big partner. China and Brazil have already signed a commercial accord covering agribusiness, technology, construction and natural resources. In October the two countries jointly launched an earth-monitoring satellite.

In South America, Lula traveled to Peru and Colombia, where he urged closer economic relations between the Andean Pact nations and their southern rivals in Mercosur (the Southern Common Market), anchored by Brazil and Argentina. He offered to mediate talks between the Colombian government and the revolutionary guerrillas of FARC. In Venezuela he gave embattled President Hugo Chávez a $1 billion line of credit to buy Brazilian exports. In mid-October Lula joined with Argentina's President Néstor Kirchner to unfurl the "Buenos Aires consensus," a proposed alternative to the much-despised "Washington Consensus," which has straitjacketed developing economies with its harsh economic rules. The future, they declared, must give poorer nations the sovereign space to determine their own development strategies, balancing social necessities with economic stability.

Lula was also a hit with delegates at the UN General Assembly, where he laid out a visionary proposal for eradicating hunger worldwide and reforming the UN itself. Then he was off to tour five Southern African capitals, with a December excursion planned for the Middle East and, later, Russia. This past summer his travels took him to Washington, where he chatted up George W. Bush. "Not the man I would like to see in the White House," Lula allowed afterward, but the two "would have to get along."

What Lula has in mind is literally changing globalization as we know it--the version led from Washington. A muscular coalition of developing countries could block the draconian investment rules that multinational corporations and bankers keep pushing for the WTO and the Free Trade Area of the Americas (FTAA), set for debate in Miami this month. A convergence of third-force nations might also generate more trade and capital investment among the developing economies, allowing somewhat less dependence on the wealthiest nations. In short, Lula's vision is for a multilateral world, with power dispersed from the center, shared more equitably with regional trading blocs and alliances. That idea is anathema to Washington (also Brussels, Paris, Berlin and Tokyo). But, for many political and economic reasons, this new approach might sustain and stabilize the global trading system more effectively than the present top-down arrangement.

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